1. What type of accounting information is provided to external users? What type of accounting information is provided to internal users?
2. Suppose your company paid $12,000 in cash for its rent. How does this transaction impact the accounting equation?
3. Rationalization is one of the components of the fraud triangle. What types of rationalization could a person use to justify misconduct? How can a company protect itself from rationalization as a part of fraud?
4. What is horizontal analysis of financial statements? How does horizontal analysis differ from vertical analysis?
5. Physical control is a key feature in an internal control system. Why is physical control such an important internal control? Give an example of physical control as an internal control.
6. Describe the income statement. Why is this statement important to the company, creditors, and investors?
7. Name and describe one liquidity ratio. What does this ratio measure? What is the formula for this ratio?